Algorand (ALGO)
Basics * A proof-of-stake blockchain first created by MIT professor Silvio Micali in 2019 has gone live for public test net use; Micali won the Turing award for his work which sought to create a public, permissionless blockchain that is both scalable and secure without fear of fork splits. * Mainnet was launched on 5-6-2019. * It continues (17-6-2019) to open source project material with the release of its node repository information, according to CoinDesk; Algorand recently open sourced its Verifiable Random Function and Developer SDKs. * On the Cardano subreddit it was mentioned (9-2019) that Charles Hoskinson (their founder) had positive words about Algorand. "They’re on the same level as Cardano in terms of academic background and research-first approach they take". ''Another redditor however also said: "''They're not as transparent as Cardano, we don't know anything about Algorand's smart contacts, governance, adoption strategy. So far all we know that it's a centralized PoS coin." ''Another connection with Cardano is that Silvio Micali invented the Verifiable Random Function (VRF) which Ouroboros now uses. * Is Sharia compliant (22-10-2019). Coin Coin Auctions * From the Foundation's website: ''"The total supply of Algos is 10 billion Algos. The full 10 billion Algos were minted in the genesis block with the following distribution: # Algo sales to community (distributed over time) 2.5B # Incentives and ecosystem support (distributed over time) 2B # Relay node runners (distributed over time) 3B # Algoranc, Inc 2B # Algorand Foundation 0.5B" * "The Foundation holds (12-2-2020) Algos to contribute to the stability of the Algorand blockchain and to support the Algorand community, ecosystem building and research. The Algos will enter the ecosystem via various channels including development and research grants and sales." * Algos will initially enter (12-2-2020) circulation via a sequence of periodic Dutch Auctions. "All bids, including successful bids, are tracked on the Algorand blockchain and associated with an account that has satisfied KYC/AML requirements. Additionally, the auction settlements will be posted to the Algorand blockchain. Therefore, all addresses that successfully purchase Algos will be recorded along with the amount of Algos that they received. Participation in auctions is not possible for the following excluded jurisdictions: United States of America and its territories, Canada, Democratic People's Republic of Korea, Cuba, Syria, Iran, Sudan, Republic of Crimea, People's Republic of China. The first Algo auction was held on June 19, 2019. A total of 25,000,000 algos were sold at a clearing price of $2.40." * From this article (19-6-2019) "The auction brings Algos, the native token of the Algorand blockchain platform, into market circulation for the first time. Originally scheduled to last for more than five hours, the auction sold out in under four hours, due to oversubscribed demand from a large group of global participants. The Dutch Auction mechanism ensured the market, not the seller, set the price of the offering and that each participant paid the same price per Algo." * From the EAC 2020 report: "The total supply from direct Foundation sales, planned to approach 1B over 2019 and 2020, was eventually amounted to around 6M in 2019. Now the Foundation has decided to resume sales to fund research and ecosystem development, but with a maximum possible amount of 150M in 2020, and will structure the sales to have the minimum impact on the market dynamics." Refunds and Burns * From the EAC 2020 report: "One of these features was the 90% Refund, a right owned by the auction buyers only, and not directly associated with the Algos bought at auction. On August 1, the Early Redemption of Auction Refund was announced: auction buyers could receive 85% early redemption if they transferred Algos back to the Foundation. This way 19.9M Algos, out of a total of 25M Algos sold at the auction, were permanently retired from supply and eventually burnt by the Foundation." Tokenomics * The Foundation changed (2-1-2020) the tokenomics of Algorand in early 2020: "Under the guidance of the Economic Advisory Committee (EAC), the Foundation has: '' ''1. Supported temporary suspension of the distribution of Algos going to the early backers performing the role of Node Runners. The suspension came into effect on September 27, 2019. During the suspension, the Foundation agreed with the Node Runners on a new distribution plan that, in 2020, will release a minimum of 3% of the tokens allocated to the Node Runners, instead of the originally planned 50%. '' ''2. Reduced the Foundation's own selling plans for 2019 and 2020 from around 1 Billion Algos to a maximum of 150 Million Algos. '' ''3. Halved the speed of distribution of the participation rewards that go evenly to all Algo holders to reflect the significantly reduced token supply. The distribution will go down from an annual quantity that amounted to almost 20% of the circulating supply in 2019 to a percentage just under 10% in 2020, reducing inflation. The above measures mean for 2020 a reduction of Node Runner distribution (potentially by more than 90%), a reduction of Foundation selling by more than 80%, and a halving of the distribution of participation rewards. The oversupply from Node Runners vesting and its impact on the Algo market was the focus of the previous State of the Economy report. The new vesting agreement includes drastic cuts in the vesting rate, hence it is expected to have a major impact on the Algo market. Specifically, 3.2M Algos were vested daily during the summer, exerting a powerful downward pressure (even if only a percentage reached the market). In contrast, only 205K Algos will be vested daily under the base rate in the new agreement during 2020. This distribution rate is only accelerated when the Algo price increases, specifically if a moving average of the Algo price rises above the previous high reached since the beginning of the new agreement. The new agreement therefore creates an incentive for Node Runners to hold Algos and support the market to obtain steady growth. Moreover, backers that sell their vested Algos (despite the incentive to hold) have a stabilizing effect on the currency, since dropping price will revert the vesting back to its base low rate. In return for this significant vesting delay, an additional 25% reward is allocated to Node Runners. This is done without altering the total Algo supply, as the Foundation sales amount has been reduced by an equivalent figure. This 25% will not undermine the effectiveness of the new vesting plan, since under the base vesting schedule these additional Algos will be vested only in 5 years from now, when circulating supply will be much larger than it is now, making this vesting plan harmonic with the evolution of market circulating amount." Tech * Algorand uses a pure proof-of-stake (PPoS) consensus protocol built on Byzantine agreement. * "Performance on the Algorand platform exceeds 1000 transactions per second (TPS) with a latency of less than 5 seconds." * From this blog (18-6-2019): "The Algorand consensus protocol proceeds in a series of rounds. Each round, the nodes certify a block to add to the blockchain. If the network is partitioned, several attempts--called periods--may be necessary to certify a block. For more details, see the Algorand Blockchain Features Specification and this journal paper on Algorand." * From their website (12-2-2020): "A unique committee of users is randomly and secretly selected to approve every block. Nodes are run by entities representing diverse backgrounds across many different countries. Users do not need the approval of a trusted authority to use the Algorand blockchain. There is a single class of users and no gatekeepers. Every participant can read every block and have the opportunity to write a transaction in a future block. Users are randomly and secretly selected to both propose blocks and vote on block proposals. All online users have the chance to be selected to propose and to vote. The likelihood that a user will be chosen is directly proportional to its stake. In contrast to DPoS, PPoS doesn’t put a small set of users in charge of block generation, and users do not need to delegate their voting power to the selected few. Every user may propose and vote on blocks with a probability directly proportional to their stake, and there is no special group of users for an attacker to target. PPoS does not require users to set aside part of their stake in order to participate in the consensus protocol, and participating in the consensus protocol does not reduce a user’s ability to spend their stake. In Algorand, users are free to spend their stake at any time. No stake is ever held hostage. All stake is always where it should be—in users’ wallets ready to be spent or in the various financial instruments that the Algorand blockchain underlies." Node Types * From the Foundation's website (12-2-2020): "The Algorand network supports two types of nodes to simultaneously optimize for transaction throughput and decentralization: relay nodes and participation nodes. The difference between these nodes is one of configuration only, not software. ''Relay nodes serve as network hubs and maintain connections to many other nodes. These nodes have high-performance network connections which allow for efficient communication paths, ultimately reducing the number of hops and the transmit time of sending a message throughout the network. Relay nodes decongest noise in the system by accumulating protocol messages from participation nodes and other relay nodes connected to them, performing deduplication, signature checks, and other validation steps and then re-propagating only the valid messages. Relay nodes are also often located at internet exchange points to decrease propagation time. Anyone may (and is encouraged to) run a relay node.'' Click here to learn how to run a relay node. ''Participation nodes are connected to Relay Nodes. They act as a user’s agent in the system. Authorized by the user’s participation key, these nodes contribute to the Algorand consensus protocol by proposing and voting on blocks on behalf of the user’s stake within the consensus algorithm. Participation nodes may represent any number of users provided the appropriate participation keys are registered with it. As with Relay Nodes, anyone may host a Participation Node.'' Offline accounts: For users who choose not to participate in the Algorand consensus protocol, the Algorand blockchain offers an offline mode. To this point, while Algorand’s Relay and Participation Nodes are public and permissionless, they have been bootstrapped by a number of entities representing a wide array of technical and organizational backgrounds across many different countries and continents." Node Runner Grants * Node runner rewards (12-2-2020) have vesting schedules that range from 2-5 years. Unvested grants will not participate. Whitepapers * Has five whitepapers on their website (12-2-2020). Their abstracts come from the website and can be read below: "Pixel: Multi-signatures for Consensus 3-12-2019 By Manu Drijvers, Sergey Gorbunov, Gregory Neven and Hoeteck Wee In Proof-of-Stake (PoS) and permissioned blockchains, a committee of verifiers agrees and sign every new block of transactions. These blocks are validated, propagated, and stored by all users in the network. However, posterior corruptions pose a common threat to these designs, because the adversary can corrupt committee verifiers after they certified a block and use their signing keys to certify a different block. Designing efficient and secure digital signatures for use in PoS blockchains can substantially reduce bandwidth, storage and computing requirements from nodes, thereby enabling more efficient applications. We present Pixel, a pairing-based forward-secure multi-signature scheme optimized for use in blockchains, that achieves substantial savings in bandwidth, storage requirements, and verification effort. Pixel signatures consist of two group elements, regardless of the number of signers, can be verified using three pairings and one exponentiation, and support non-interactive aggregation of individual signatures into a multi-signature. Pixel signatures are also forward-secure and let signers evolve their keys over time, such that new keys cannot be used to sign on old blocks, protecting against posterior corruptions attacks on blockchains. We show how to integrate Pixel into any PoS blockchain. Next, we evaluate Pixel in a real-world PoS blockchain implementation, showing that it yields notable savings in storage, bandwidth, and block verification time. In particular, Pixel signatures reduce the size of blocks with 1500 transactions by 35% and reduce block verification time by 38%. This paper was peer-reviewed and will appear at USENIX Security 2020. The paper can be viewed here. Vault: Fast Bootstrapping for the Algorand Cryptocurrency 24-2-2019 By Derek Leung, Adam Suhl, Yossi Gilad, Nickolai Zeldovich Abstract: Decentralized cryptocurrencies rely on participants to keep track of the state of the system in order to verify new transactions. As the number of users and transactions grows, this requirement becomes a significant burden, requiring users to download, verify, and store a large amount of data to participate. Vault is a new cryptocurrency design based on Algorand that minimizes these storage and bootstrapping costs for participants. Vault’s design is based on Algorand’s proof-of-stake consensus protocol and uses several techniques to achieve its goals. First, Vault decouples the storage of recent transactions from the storage of account balances, which enables Vault to delete old account state. Second, Vault allows sharding state across participants in a way that preserves strong security guarantees. Finally, Vault introduces the notion of stamping certificates, which allow a new client to catch up securely and efficiently in a proof-of-stake system without having to verify every single block. Experiments with a prototype implementation of Vault’s data structures show that Vault’s design reduces the bandwidth cost of joining the network as a full client by 99.7% compared to Bitcoin and 90.5% compared to Ethereum when downloading a ledger containing 500 million transactions. The peer reviewed white paper can been viewed here. Algorand Agreement - Super Fast and Partition Resilient Byzantine Agreement 28-8-2018 By Jing Chen, Sergey Gorbunov, Silvio Micali, Georgios Vlachos Abstract: We present a simple Byzantine agreement protocol with leader election, that works under > 2/3 honest majority and does not rely on the participants having synchronized clocks. When honest messages are delivered within a bounded worst-case delay, agreement is reached in expected constant number of steps when the elected leader is malicious, and is reached after two steps when the elected leader is honest. Our protocol is resilient to arbitrary network partitions with unknown length, and recovers fast after the partition is resolved and bounded message delay is restored. We will briefly discuss how the protocol applies to blockchains in a permissionless system. In particular, when an honest leader proposes a block of transactions, the first voting step happens in parallel with the block propagation. Effectively, after the block propagates, a certificate is generated in just one step of voting. This white paper has been published here. Algorand: Scaling Byzantine Agreements for Cryptocurrencies 31-10-2018 By Yossi Gilad, Rotem Hemo, Silvio Micali, Georgios Vlachos, Nickolai Zeldovich Abstract: Algorand uses a new Byzantine Agreement (BA) protocol to reach consensus among users on the next set of transactions. To scale the consensus to many users, Algorand uses a novel mechanism based on Verifiable Random Functions that allows users to privately check whether they are selected to participate in the BA to agree on the next set of transactions, and to include a proof of their selection in their network messages. In Algorand’s BA protocol, users do not keep any private state except for their private keys, which allows Algorand to replace participants immediately after they send a message. This mitigates targeted attacks on chosen participants after their identity is revealed. We implement Algorand and evaluate its performance on 1,000 EC2 virtual machines, simulating up to 500,000 users. Experimental results show that Algorand confirms transactions in under a minute, achieves 125x Bitcoin’s throughput, and incurs almost no penalty for scaling to more users. This whitepaper has been peer edited and reviewed and is published here. Algorand Theoretical Paper 26-5-2017 By Jing Chen, Silvio Micali Abstract: A public ledger is a tamperproof sequence of data that can be read and augmented by everyone. As currently implemented, however, they scale poorly and cannot achieve their potential. Algorand is a truly democratic and efficient way to implement a public ledger. Unlike prior implementations based on proof of work, it requires a negligible amount of computation, and generates a transaction history that will not “fork” with overwhelmingly high probability. This whitepaper has been peer edited and reviewed and is published here." Algorand 2.0 * Had an upgrade that brings tokenization, DeFi and smart contracts. From CoinDesk (22-11-2019): "The Algorand Foundation released an update to the blockchain’s protocol on Thursday, adding decentralized finance (DeFi) features plus the long-awaited smart contracts. “Algorand 2.0” is the largest expansion of the network’s capabilities since the network’s launch in June 2019. Algorand’s ASC smart contracts have back-end differences from the smart contracts pioneered by blockchains like ethereum. That’s because Algorand’s new in-house programming language Transaction Execution Approval Language (TEAL), is non-Turing-complete. TEAL smart contracts are safer to write and execute, despite having more limited potential functionality, Algorand argues. For example, ASC cannot support recursive logic, according to the developer page. “We don’t believe that turing-complete is necessary for the majority of the use cases,” said Paul Riegle, head of product at Algorand. “It adds immense attack surface and a potentially steep performance impact.”" Layer 1 components * From the Foundation's website (12-2-2020): "Algorand Standard Assets; ASAs are standard blockchain assets with customizable options, directly in Layer-1. Atomic Transfers; Secure transfers and immediate transaction settlement for multiparty transactions built in Layer-1. Algorand Smart Contracts in Layer 1; ASC1s are stateless smart contracts in Layer-1 with numerous possibilities for governed transactions." Assets * From the Foundation's website (12-2-2020): "ASAs provide a standardized, Layer-1 mechanism to represent any type of asset on the Algorand blockchain. These can include fungible, non fungible, restricted fungible and restricted non fungible assets." Role Based Asset Control (RBAC): Optional and flexible asset controls for issuers and managers for business, compliance, and regulatory requirements. This includes: # Quarantine asset accounts for investigative purposes # Force transfer an asset where legal or other regulations require it # Whitelist model for privileged asset transacting, which allows only specific addresses that have been approved to transact within a specific asset (all others will be restricted) # Flexible asset reserve models for custom business requirements # Off chain asset documentation included in on chain asset definition User Protections: Asset spam protection that prevents unknown assets that may have tax, legal, or reputational risk from being sent to users without their explicit approval (users must opt-in to accept new assets)." Differentiators # ASAs are incredibly fast and secure, as they are built directly into Algorand’s Layer-1 # ASAs are low cost to execute, due to Algorand’s miniscule transaction fees of 12-2-2020 medium tx [https://algoexplorer.io/ fee was 0.001 Algo, with a price of around $0.3 per Algo] # Easy and simple asset issuance for developers and enterprises # Universal interoperability of all assets issued on Algorand Use Cases # Asset tokenization # 3rd party asset issuance on Algorand # Democratize access to investments # Disintermediate cross border transactions" Atomic Transfers * From the Foundation's website (12-2-2020): "Atomic Transfers offer a secure way to simultaneously transfer a number of assets among a number of parties. Specifically, many transactions are grouped together and either all transactions are executed or none of them are executed. Truly atomic, there is no need for escrow or reliance on hash time-locked contracts. This is a new way of technical execution of complex transfers that is smooth and fast. Use Cases # Simplified and expedited debt settlement # Efficient matched funding # Decentralized exchanges, when combined with Algorand Standard Assets (ASA) and Algorand Smart Contracts (ASC1) # Instantaneous settlement of complex multi party / multi asset transactions # Any instance of a multilateral trade" ASC1: Algorand Smart Contracts at Layer-1 * From the Foundation's website (12-2-2020): "They are economic relationships made up of basic transaction primitives written in a new language called Transaction Execution Approval Language (TEAL). Private key management is not required for accounts governed by ASC1s. Use Cases # Cross chain Atomic Transfers # Regulated disbursements # Fee execution # Escrow accounts # HELOC # Decentralized exchanges # Reimbursement validation # Collateralized debt # Delegated / high security account management # Interface with oracles or other off-chain data providers" Staking * From their explorer (12-2-2020): Online Stake: 1,896,905,236.810761 Algos Circulating Supply: 3,089,762,985.889303 Algos 200 Million Algo Staking Reward Program * From this blog (6-8-2019): "The program provides 200 million Algos to registered participants, allowing them to increase their position in Algos by holding the token. The rewards will be distributed over the course of four 6-month periods, a total of two years, to qualifying participants who commit by registering (via a micro transaction) by block number 1618450, which is expected to happen on August 31st, 2019. Only the first 200 million Algos across the registered wallets will be eligible. '' ''Participants have an opportunity to earn a return of more than 100% by participating in the program. The return rate could increase if some users choose to voluntarily disqualify themselves by dropping out of the program. The Algos which the disqualified users would have received are returned to the reward pool to be distributed to the remaining eligible users. The entire reward pool is fixed, and 50 million Algos will be distributed on a stake weighted basis to remaining qualifying participants at the end of each 6-month period, according to a published schedule." * Requires KYC: "The Foundation requires (3-2020) all participants to pass through a KYC/AML check as a condition to receive the staking rewards. The Algorand Foundation has enlisted Coinlist to facilitate the completion of the KYC process." Node Operators * From the Foundation's website (12-2-2020): "In addition, in the early stages of the Algorand blockchain, Algorand Inc. will put only part of its total stake online, so as (1) not to have a controlling position while (2) offering resiliency against hostile takeover attacks. We believe these steps will ensure that the Algorand network will reach its goal of true decentralization in the safest and quickest way possible." The Foundation itself stakes (12-2-2020): "The Foundation’s stake is 500M Algos (and the participation rewards thereof). This stake participates in the consensus protocol contributing to the protocol’s integrity." * Stake.fish is a Relay node operator "Runtime Verification Verifies the Algorand Blockchain Will Never Fork" * From this blog post (25-6-2019): "To achieve even greater assurance about the Algorand protocol, and to make future design and validation of new protocols easier, we have chosen to enhance our mathematical proofs on paper with machine-checkable formal verification approaches. For this purpose, we engaged Runtime Verification, a company with deep verification expertise, to verify the correctness of the Algorand consensus protocol. We are pleased to report a major milestone in this effort: Using the Coq theorem prover, the team has developed a precise mathematical model of the protocol and formally verified its safety guarantee (that the blockchain never forks). They have written a blog post describing this effort with links to the repository containing the model and the proof. We want to thank Grigore Rosu, Musab A. Alturki, Brandon Moore, Karl Palmskog, and Lucas Pena for their great effort and achievement." * From their website (12-2-2020): "The Algorand blockchain never forks. Two blocks can never be propagated to the chain at once because only one block can have the required threshold of committee votes. At most, one block is certified and written to the chain in a given round. Accordingly, all transactions are final in Algorand. Once a block appears, users can rely on the transactions it contains immediately and they can be confident that the block will forever be part of the chain, which means the money they receive is safe." Governance * From their website (12-2-2020): "The Algorand platform takes a consensus approach to protocol changes, which facilitates continuous evolution of the protocol and eliminates potential hard forks that could fracture the community. This ability is powered by the Algorand consensus protocol that enables the users to reach consensus on anything. Not just on the next block, but also on a protocol upgrade." Roadmap Usage * From their explorer (12-2-2020): Daily TXs 6027 * AssetBlock joined (23-5-2019) the Algorand Ecosystem to build exclusively on Algorand to modernize Real Estate Investment. * Otoy started (5-6-2019) building on Algorand to 'Democratize Holographic Computing' Competitors Pros and Cons Algorand Protocol Team Team * Located in Singapore. Full team can be seen here (12-2-2020). * Steve Kokinos; CEO * Silvio Micali; Founder * Jill Carlson; advisor * Naval Ravikant; advisor * Paul Riegle; head of product * Has 5 research fellows * Greg Colvin; Joined Algorand’s Theory Team to work on key Roadmap Items Investors * Netted some $66 million in funding, with backers including venture capital firms Union Square Ventures Multicoin Capital and Pillar, both of which funded Algorand’s $4 million seed round in February of 2018. * Has had investment and possible contributions from NEO Global Capital Partnerships * "IDEX Plans for Next-Generation Decentralized Exchange on Algorand" ''(4-9-2019) * ''"Securitize, a platform delivering trusted global solutions for compliant digital securities, has partnered with Algorand to support Securitize’s DS Protocol on the recently launched Algorand blockchain. Securitize’s platform-agnostic DS Protocol will now support Algorand, giving issuers using Securitize an additional high-performance platform option for issuing, trading, and performing corporate actions using digital securities." (10-9-2019) * Is (11-2-2020) 'Playbook Partners' with The Blockchain Education Network . * Flipside Crypto and Algorand partnered (12-6-2019) to Enable Analytics for DApps * Algorand has become (17-7-2019) a member of the International Swaps and Derivatives Association (ISDA). "ISDA developed its Common Domain Model to allow all financial institutions to have a single, common digital representation of derivatives trade events. Algorand is implementing the ISDA Common Domain Model on their blockchain." * On it's website (12-2-2020) it has a long list of partners, including the following: Pillar, Foundation Capital, Hex Capital, MetaStable, MultiCoin Capital, NEO Global Capital, P2P Capital, Spark Pool, Wing, Youbi Capital, Nirvana Capital. Algorand Foundation Basics * Located in Singapore. * "The Foundation holds (12-2-2020) Algos to contribute to the stability of the Algorand blockchain and to support the Algorand community, ecosystem building and research. The Algos will enter the ecosystem via various channels including development and research grants and sales." University Program * From their website (6-6-2019): "The Founding Members of the Algorand Foundation’s university program include: # ''Massachusetts Institute of Technology'' # Peking University # Sapienza University of Rome # Stony Brook University # Tel Aviv University # Tsinghua University # University of California, Berkeley # University of Salerno # Università della Svizzera Italiana # University of Waterloo Specifically, the Founding Members will be involved in suggesting technical research efforts, and supporting the decentralized Algorand platform. Each institution will have a program representative that will work closely with the Foundation. As advisors, the program representatives will also work to identify areas of potential development and innovation in both blockchain and cryptography." Funding * From their 2020 Transparency Report: "Period: November 2, 2019 to February 10, 2020. A total 125K Algos were used as compensation for members of the Foundation’s board of directors and its advisory committees." Algorand Economic Advisory Council * Was appointed around the time of the inaugural auction. * Creates reports on Algorand's coin details. * Changed Tokenomics of Algorand in early 2020. See more above under 'Coin'. Algo VC Fund * Algo Capital has raised $200 million for its Algo VC Fund, with the cash intended to support projects in the Algorand economy. The firm lost (5-10-2019) a few million dollars in USDT and ALGO tokens after its chief technology officer’s phone was breached. This fund should not be confused with the 200M Algo Staking Reward program. Category:Coins/Tokens